A great way to start the year is to get clear on exactly how you can make your revenue goals. A revenue forecast is the perfect tool. You’ll need to be proficient in Excel, and if not, you can use a tool like LivePlan (www.liveplan.com) which makes business planning much easier.
The first step is to organize your products and services (or revenue stream) into definable groupings. In Excel, enter the revenue description in the first column and use the second column for price. You may be able to export a revenue list from your accounting system, which will save some time. Use column three to enter the number of items or volume that you estimate selling for the year. Column four should contain formulas to multiply the price by the volume to get total revenue for each service/product you sell. You can then sum the numbers in column four to generate your projected revenue for the year.
Getting Industry-Specific
Depending on what industry you’re in, you may need to make some adjustments to the above simplified revenue plan. For example, if your business is construction, you’ll need to list out your projects instead of products and services, and you’ll then need to make adjustments if your project will go longer than one year. You’d need to add a couple of extra columns to determine the percentage of the project that will be complete and billable in 2015.
If you bill by the hour, you’ll need to calculate how many hours of service you’ll be able to charge for and factor that into the equation.
If you sell products, you’ll need to figure a discounted price. I recommend you have an extra line for each product that sells at a discount and allocate the total amount you plan to sell at each price. If that’s too much work, you can calculate an overall discount rate and apply it to total revenue at the bottom of the worksheet.
Use the 80-20 Rule
If you sell a lot of products and services, consider bundling them into subgroups to keep your plan cleaner and at a higher level. Spend only the amount of time that’s worth the insights you’ll gain from doing an exercise like this.
A Prosperous Year
Once you’ve created the plan, you can now take action based on insights you’ve gained and continuously track your progress. Perhaps you’ve even found a whole new set of revenue goals to accomplish. If you need help constructing or analyzing this plan, feel free to reach out to us and let us know how we can help.
